YOU READ IT HERE FIRST: A federal judge in Newark today sentenced Ronald J. O’Malley, the former chairman and commissioner of the Bergen County Improvement Authority, to 24 months in prison for his role in a mortgage fraud scheme that falsely claimed several mortgage borrowers worked at the BCIA.
In addition to the federal prison term, U.S. District Judge Dennis M. Cavanaugh sentenced O’Malley to three years of supervised release and ordered him to pay a $25,000 fine.
O’Malley, 48, and Laura-Jean Arvelo, a former employee at a company that did business with the BCIA, ended up “exploiting the credibility of a public agency to enrich themselves” through the use of bogus documents and statements that tricked lenders into making mortgage loans, U.S. Attorney Paul J. Fishman said.
All told, the pair collected somewhere in the neighborhood of $200,000 to $400,000 in fees from 2006-2009 through Diversified Financial Group — doing business as Residential Mortgage Corporation — which was co-founded by O’Malley.
“In support of the false representations, O’Malley and his coconspirators arranged for the BCIA staff to falsely confirm the borrowers’ employment to banks and other mortgage lenders calling to verify the information,” Fishman said in a release. “O’Malley and his co-conspirators also created and arranged for the creation of false and fraudulent BCIA paystubs and W-2 forms, which were also submitted to lenders.
“O’Malley and his coconspirators also made false representations regarding borrowers’ employment at places other than the BCIA, and created similar false documentation in support of such claims. The coconspirators also created false asset information for borrowers, including by taking O’Malley’s own bank and brokerage account statements and “cut-and-pasting” a borrower’s name and address over his own. They also prepared phony leases showing fake rental income for borrowers.”
The BCIA, a quasi-governmental body that has the power to issue debt, became a rainmaker after O’Malley took control: Its bond activities shooting from $4.3 million just eight years ago to more than $50 million as 2009.
The authority’s lawyer, Dennis Oury, pleaded guilty that same year to scheming with former Bergen Democratic Chairman Joseph Ferriero to secretly profit from a grants-writing company they created.
O’Malley of Upper Saddle River, and Arvelo, 52, of River Vale, pleaded guilty in federal court in Newark in August to conspiring with one another, as well as with Residential Mortgage co-owner Edward Olimpio and two other company employees, Daniel Gilmore and Rachell Fischbein.
The pleas were expected after Olimpio, of Boonton, and Fischbein, of Hillsdale, both admitted that they schemed with O’Malley and others to submit bogus loan applications and supporting documents that falsely claimed borrowers were employed by the BCIA (Guilty pleas pose big trouble for Bergen Improvement Authority).
Gilmore also took a plea — leaving O’Malley and Arvelo little choice but to plead out themselves rather than risk a trial in which those who’ve admitted their roles would be prepared to testify.
Having dispensed with O’Malley, Cavanaugh sentenced Arvelo to two years of probation.
O’Malley and Arvelo arranged for staff at the public agency to respond to telephone calls from banks and other mortgage lenders who called to verify the claimed BCIA employment; created and arranged for the creation of bogus pay stubs and W-2 forms; and even pasted a borrower’s name and address into O’Malley’s own bank and brokerage account statements, the original indictment charges.
O’Malley and his cohorts always had answers for suspicious lenders: For instance, when a lender discovered that pages from a savings passbook had been falsified to show the borrower’s name and address rather than the account’s true owner, “O’Malley claimed that the briefcase containing his passbook had been stolen from him … and used without his knowledge to obtain a mortgage loan,” federal authorities said.
Fishman credited Special Agents of the FBI, the IRS Criminal Investigation Division, and investigators from his own office for the work leading to the pleas, secured by Assistant U.S. Attorney Rachael A. Honig, deputy chief of Fishman’s Criminal Division, and Assistant U.S. Attorney Christine I. Magdo.